As the country’s economic metrics have continued to maintain its upward trend, Nigerian students who combine academics with entrepreneurship are facing setbacks in growing their business. For Twentyten Daily, Quadri Yahya spoke to some of these students facing this hardship.
In October 2022, Sarah Adegboyega, who owns a fashion accessories store, was making a profit of N5,000 from every N10,000 item sold. But this is no longer the case. Now, Adegboyega gets the same item for N18,000 and makes a profit of N3, 000.
Adegboyega, a student of Agricultural Economics at Olabisi Onabanjo University, started selling fashion accessories in November 2021 to her colleagues on campus.
“The business, in the beginning, was profitable until a few months after the profit started dropping and prices were going up”, she lamented, stressing that the increase made it difficult to persuade students to buy her items.
Like Adegboyega’s enterprise, businesses owned by students have been affected by the dwindling economy in Nigeria.
Nigerian businesses owned by students are struggling to survive as the country’s economy is reducing the profits of these students.
Recently, the National Bureau of Statistics said that the country’s inflation accelerated to 20.5 percent in August 2021. This, according to NBS, is the highest in 17 years. In a separate report, NBS placed the country’s Gross Domestic Product (GDP) at an increase of 3.54% (year-on-year) in real terms for the second quarter of 2022.
These developments consistently changed the market prices of goods, which, according to Adegboyega, defines how much she sells her products.
“Recently, I got an order from Offa, Kwara State; when I got to the park to make the delivery, the delivery fee which was N1000 is now N1500. I was surprised and I didn’t know how to tell my customer about it so it ended up removing N500 from my profit,” she explained.
Impact of foreign currency
Adegboyega, a retail business owner who imports most of her goods, said that the currency exchange rate (Naira to Dollar) takes a major chunk of her profit.
The Nigerian currency exchange to a dollar has continued to fluctuate since the beginning of 2022. A report said that the naira significantly fell against the dollar days after the Central Bank of Nigeria made its biggest interest rate hike yet in a bid to check inflation and defend the currency.
At this time, the Naira exchanges with the dollar between N725 and N735.00.
“Have you not noticed how expensive things are? It is difficult to convince people to buy jewellery when they have not fed themselves,” Adegboyega lamented.
Narrating her recent experience to this reporter, she said, “On October 10, 2022, I bought a necklace for N10, 000. On October 20, 2022, I sold it for N15,000. On October 30, 2022, my supplier is now telling me that the same necklace is N18,000.
“How will the business grow? Most vendors are just running at a loss because the economy does not favour us,” she said.
Small businesses folding up
Most businesses owned by the students are small and medium-scale enterprises (SMEs). However, challenges troubling the economy hinder the growth of these businesses despite the sector’s significant contribution to the country’s economy.
A survey by PwC, an organisation that provides information about businesses in Africa, reported that SMEs contribute 48% to the national GDP.
This accounts for 96% of businesses and 84% of employment in Nigeria.
However, according to the United Nations Industrial Development Organisation’s Investment and Technology Promotion Office, although everybody in Nigeria desires to become an entrepreneur, only 40 percent of the dreamers get to start, but no more than 20 percent survive.
Rohimot Ojeleye, a sociology student at Osun state university, partially shut down her fashion designing business in 2019 after prices of clothing materials began to increase.
When she reopened her business in 2020, Ojeleye was surprised that the rate of these materials had doubled. In 2019, Ojeleye said a yard of senator material will sell at N700 but now, it sells for N1,500.
Also, a Kashmere material sold at N900 per trouser in 2019 now sells at N1,500 in 2022. Krep was N700 in 2019 per yard but now sells for N1,000 per yard, Chiffon was N300 per yard but now sells at N 600 per yard.
‘The economy is tormenting’
Mysha Salaudeen, a student baker, had, in recent times, struggled with the increasing prices of groundnut oil, cooking gas and flour– three major needs for her business.
The Moshood Abiola Polytechnic student said, “baking is no longer a profitable business.”
“Since 2019, when I gained admission to study Marketing, I have been baking chin-chin, peanuts and sausage rolls to sell and pay some supplementary bills. But, I had to close it because the prices of ingredients increased”, she narrated.
Salaudeen said the price of a pint of flour was N700 in 2019, but by 2020 it has increased to N2,000. For a bottle of groundnut, it costs N400 in 2019, but now N1,100 in 2022. Also, in 2019, 1 kg of gas was N250 but now N850 as of October 2022.
Mysha noted that when the cooking gas price increased, she resorted to using charcoal.
Earlier in 2022, the National Bureau of Statistics (NBS) says the price of 12.5kg of liquefied petroleum gas (LPG), better known as cooking gas, has increased by 122.15 percent year-on-year.
A breakdown analysis of the data on the NBS website shows that Mysha would be filling 12.5kg cylinder of cooking gas at N4,422.32 in July 2021 compared to an average price of N9,824.07 in July 2022 – around the time the student has to shut down the business.
Economist wades in
A professor in economics, Sheriffdeen Tella, said proper planning, including flexibility, would help student enterprises.
“It is easy to run a business anywhere in the world, just that every business has its challenges. The challenges might be environmental, and government policies – which may be changing all the time; the challenge may be the time that the person has for the business; it may be local or imported products; the availability.
“For students, the students must ensure that they are involved in the business and not give it out for anybody to manage for them. It depends on the flexibility of what they are doing and their courses in the institution. They should have time to be involved in their businesses, which means they must be very close to their business.”
As the economic effect continues to worsen the chances of student business growth are limited. For Adegboyega, this might tell whether she continues her business or not in the coming months.